Would You Reject A $6.0-billion Offer?

Its essential to know this because, at some point

, you may receive an offer for your business from the competition or a larger company looking to expand into your market, and youll want to know if you should take it.

Im writing about this because, on Monday, it was announced that Groupon, an Internet coupon sales company, had rejected a $6.0-billion offer from Google. As we all know, Google is an important company with lots of money and influence. Its estimated that Groupon was pulling in about $2.0 billion annually, and it is still growing.

As you can see, Google offered more for the company than it was currently worth, and likely made an offer it felt was fair. Groupon, however, disagreed. Was it the right decision to reject to the offer?

A few years ago, one of Googles competitors, Yahoo!, made a bid for Facebook. This was before Facebook reached the popularity it currently has. The offer was $1.0 billion. At the time, it may have sounded like a good offer for a business that was just getting off the ground. But Facebook rejected it, grew rapidly, and is now estimated to be worth in the neighborhood of $44.0 billion.

As you can see, Facebook understood that it was still growing and had all kinds of potential mainly because it had no competition. And, really, it still doesnt. Facebook is clearly the leader and innovator of social networking, and likely will be for quite some time.

Groupon, on the other hand, doesnt enjoy the same exclusivity. Recently, all kinds of competition has popped up that is likely taking away some of its market share. Whats more important is that Google, which clearly wants into this market, has all kinds of choice when it comes to buying another business. When they go to one of Groupons competitors, likely with a smaller offer and its accepted, Google will be able to pump all kinds of money into its acquisition and likely take over Groupons current lead in the market.

By failing to recognize its place in the market and the true power of Google, its quite likely that Groupon has overvalued itself. It appears as though they shouldve taken the offer, because Google has too many other options and too much influence. Of course, well see how this all plays out, but at first glance it seems like Groupon has made the wrong decision!

by: Adrian Newman Wealth

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